MGMT611 Managing Business Operations

Littlefield Technologies

Group 1
Hui Zhong Ning | Remya Sachidanand | Kenneth Boey

MGMT 611 - Managing Business Operations _________________________________________________________________________________________________________________________

Introduction This report summarizes the analysis, strategy and evaluation undertaken over a period of 4.92 days (268 simulated days) in the simulation of Littlefield Technologies factory. Our team took over management from day 51 to day 218 with the objective of maximizing profits by managing production capacity to effectively meet the demand. Cash balance earns interest at a compound rate of 10% per year and fulfilled contracts bring in revenue that decreases linearly with lead-time. The performance is determined by the amount of the cash at the end of the operation period. Preliminary Analysis An initial analysis was performed on the operations to derive a preliminary strategy. The said analysis was done primarily on the following areas:

a. Process Analysis BOARD STUFFING STN1 Q2

Q1

INITIAL TESTING &FINAL TESTING STN2 TUNING STN3

FINISHED GOODS

Q3

Q1: Queue at station 1 Q2: Queue at station 2 Q3: Queue at station 3

Diagram 1: Process flow diagram of production A single flow unit of Digital Satellite system receives will typically follow through the processes as described in Diagram 1. While one may be inclined to conclude that the bottleneck will be at Station 2, a closer look at the utilisation rate for the first 50 days (Figure 2) indicates that the bottleneck is more likely to be at Station 1 as demand continues to grow subsequently.

Figure 2: Utilization for 3 stations for first 50 days b. Demand Forecasting/Queue Management Initial demand forecast predicts that demand will grow linearly for 150 days before stabilizing for 30 days and declining over the final 88 days. Hence, capital investment on machines is expected to occur between 51st and 150th day. With limited information provided on the activity time at the three stations, we could infer that Station 1 is the bottleneck? from the relatively huge queue build-up at Station 1 (Refer to Figure 3).

Group 1 Littlefield Technologies

MGMT 611 - Managing Business Operations _________________________________________________________________________________________________________________________

Figure 3: Queue build-up for 3 stations for first 50 days

c. Cost-benefit analysis of machine acquisition

Cost of machine, compound interest loss, and increase in income if orders are fulfilled. Eg, Stn 1 = 10,000, compound interest = 0.1 x 10,000 per year. 1000/667/333/0 earned
[Any insights here] Strategy Our overall strategy was to increase capacity through purchase of machines at Stations 1 and Stations 3 to meet the increase in demand from 51st to 150th day. 2-3 machines were expected to be acquired within 50 days as queue and utilization build-up as demand begins to peak from 51st day. This is to ensure orders can be fulfilled as close to the 24-hours lead-time as possible to earn the $1,000 revenue. Specifically:

[4-step monitoring process]: Queue->Utilization->Revenue->Demand [Queue+Utilization]: A queue build-up + consistent full-utilization indicate a good opportunity to purchase machine. [Demand+Revenue]: Onset of demand peak and drop in revenue confirms inability to handle backlog & potential further loss in revenue if capacity not increased. [Queue +Utilization+Revenue]: A low utilization accompanied by high queue build up and lower revenue indicates that there is high queue built up and that utilization cannot be used as a measure to decide whether or not to increase the machine count [Machine acquisition]: With expectation that demand will generally increase up to 150th day, machines will be acquired as long as increase in demand (and revenue) is expected to be higher than the loss in interest income and expenditure. We also intended to dispose of 1-2 machines between 166th to 218th day as demand drops to get rid of excess capacity and earn interest income. [Priority for testing machine]: With the expectation that the initial testing would take a shorter time to complete than the final testing, we intended to set the priority at step 4, especially when the revenue is dependent on minimization of lead-time. Priority would be adjusted to step 2 in the event that there is a huge build-up of queue at Station 1.

Performance Evaluation
The first Board Stuffing Machine purchased at Day 53 as demand began to increase. This was in accordance with our strategy, but a delay in execution of the purchase saw our team being overtaken by other teams who were able to gain revenue from the increase in orders. Hence we were lagging other teams due to our inability to fulfill the backlog of orders that were built-up. A Tuning machine was subsequently purchased at Day 56 after the queue build-up at station 3 increased drastically, causing the revenues to drop .After the purchase of the additional Tuning machine the revenues increased to $1000 and the queue built up at station 3 reduced substantially though the utilization at station 3 remained very low. Judging from the utilization as per Figure 4, we could have purchased at Station 1 instead to prepare for the growing demand. Since queue build up was low when the demand was high and utilization was low when the demand was low, we decide not to buy any more machine and wait to see new trends in demand. As demand increased, we noticed that there was high build up at station 1, and utilization peaked at station 1, hence we decide to buy one more machine at station 1 on day

Group 1 Littlefield Technologies

MGMT 611 - Managing Business Operations _________________________________________________________________________________________________________________________

75. The demand started to increase to a peak on days 164 and 188. Utilizations of stations 1 and 2 increased and maxed at 1 from day 162 to day 188. Job queues at stations 1 peaked at day 169 and that at station2 peaked at day 185. We were contemplating buying another station 1 on day xxx but decided to wait since we were expecting jobs arrival to drop. However, on day 186, it was evident that the queue at Station1 had subsided while that at Station 2 did not show signs of doing so. As we were unable to meet the 3.0 lead-day, our revenue had also dropped to zero on day 179 and showed no signs of picking up. Therefore on day 187 we decided to buy another Station 2. On hind-sight, we should have bought the Station 2 earlier as that would have helped minimize the period of low revenue and to recover more of our capital investment.

[any part we did well] we monitored our competitors movements. Moved to 4th position on Day?] Due to our foresight in purchasing another Machine 1, could have bought one more? What else did we do well?

Conclusion [Kenneth to complete this part]

Group 1 Littlefield Technologies